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Export Management and Compliance Programs for Forwarders Michael Hoffman

Export Management and Compliance Programs for Forwarders Michael Hoffman Bureau of Industry and Security WESCCON October 20, 2006. What is an EMCP?. Written procedural guideline and reference manual Provides a system of checks and safeguards. PRELIMINARY STEPS IN DEVELOPING AN EMCP.

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Export Management and Compliance Programs for Forwarders Michael Hoffman

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  1. Export Management and Compliance Programs for Forwarders Michael Hoffman Bureau of Industry and Security WESCCON October 20, 2006

  2. What is an EMCP? • Written procedural guideline and reference manual • Provides a system of checks and safeguards

  3. PRELIMINARY STEPSIN DEVELOPING AN EMCP • Understand the Export Administration Regulations • Identify risks and areas of concern based upon your role in the transaction • As a forwarder • As an advisor • As an exporter (in routed export transaction)

  4. WHY YOU SHOULD CARE ABOUT THIS STUFF • Avoid Criminal and Administrative Penalties • Encourage Good Business Practices

  5. EMCP COMPONENTS • Administrative Elements • Screening Elements • Order Processing System

  6. ADMINISTRATIVE ELEMENTSPROVIDE THE FRAMEWORK • Management Policy Statement • List of Responsible Officials • Recordkeeping • Training • Internal Reviews • Notification

  7. MANAGEMENT POLICY STATEMENTCritical to Effective Export Compliance Program • Communicates importance of compliance with export controls • Demonstrates senior management commitment

  8. Written Policy Statement • Clearly states compliance • policy • Signed by senior management • Distributed to all employees • Names contact person for • questions • Describes penalties for • non-compliance

  9. LIST OF RESPONSIBLE OFFICIALS • Identifies export compliance personnel in company • Establishes their authority to do job • Describes their responsibilities • Helps prevent conflict of interest regarding responsibilities

  10. SCREENING ELEMENTSPROVIDE MECHANISMS TO EVALUATE TRANSACTIONS • Denied Persons • Specially Designated Nationals • Informed Letter/Entity List/General Orders • Diversion Risk • Product Classification/Licensing Determination • Sensitive Nuclear, Missile Technology, Chemical/Biological Weapons • Antiboycott

  11. DENIED PERSONSPart 764, Supplements 1 & 2 • Identifies parties with export privileges revoked • Transaction or customer based screening • Document your search

  12. U.S. DEPARTMENT OF TREASURYOFFICE OF FOREIGN ASSETS CONTROL (OFAC) Specially Designated Nationals List (SDN) includes: • Specially Designated Terrorists (SDT) • Specially Designated Global Terrorists (SDGT) • Foreign Terrorist Organizations (FTO) • Specially Designated Narcotics Traffickers (SDNT) • Specially Designated Kingpins (SDNTK) • Front companies for embargoed countries Internet Access --http://www.treas.gov/ofac

  13. Informed Letter, Entity List, General Orders • BIS may inform companies individually: “informed letter” • BIS maintains “Entity List” in Supplement No. 4 to Part 744 • informs public of certain entities subject to licensing requirements for specified items • General Order 3

  14. DIVERSION RISK SCREEN • Address similar to Denied Party • Packing inconsistent with stated item, method of shipping, or destination • Freight forwarder as ultimate consignee • Unusual routing, delivery

  15. PRODUCT CLASSIFICATION/LICENSE DETERMINATION • Forwarders typically dependant upon exporters for: • Proper classification • Licensing information • Forwarders should address “Red Flags” concerning classification and license claims

  16. CLASSIFICATION and LICENSING “RED FLAGS” • License number with improper format • Use of old terminology: 1565A, GDEST • Inconsistent or contradictory entries

  17. CONCLUDING THOUGHTS • Enlist senior management support • Ensure written plan addresses areas of greatest risk • Plan must be relevant • to current operations • for affected employees

  18. WHERE TO GO FOR ASSISTANCE • BIS Western Regional Office • Newport Beach, CA (949) 660-0144 • San Jose, CA (408) 291-4212 • Export Management and Compliance Division • Washington, DC (202) 482-0062 • Export Enforcement • Washington, DC (800) 424-2980

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